Beacon Technology: The Where, What, Who, How and Why

Beacons have been generating buzz since 2013, when
Apple first introduced iBeacon technology. And while it may have appeared for a time that this new way of connecting with customers might be slow to catch on, today it’s catching fire. This year began with BI Intelligence reporting that beacons would be driving $44 billion in retail sales by 2016, up from $4 billion this year. Then last month came the big news that Apple and IBM have teamed up on a host of new apps incorporating analytics and iBeacons. And just last week, Ad Age reported on the impending reinvention of retail by digital technology, as the physical and digital worlds converge in stores.

Sounds like exactly the right time for a quick primer on beacon technology and what it’s all about. After all, as the Future of Privacy Forum has pointed out, while there’s been a lot of hype around beacons, they haven’t necessarily been very well understood. This week, I’d like to offer some “beacon basics” that I hope will provide a fundamental understanding of the technology and its potential and help more companies of all sizes benefit from it. So without further ado, here’s the where, what, who, how and why of beacons today.

Apple explains iBeacon technology to consumers as the enabling technology for Apple devices to alert apps or websites (which the user has opted into) when someone approaches or leaves a location. In other words, retail or other venues that have beacons in place can detect where a customer is at any given moment. Then — and this is the key part, of course — the retailer or other business can push timely messages to that customer promoting products or providing other useful information. Say someone is walking past a retail store; if they’ve downloaded the retailer’s mobile app, the company can use beacon messages to capture their attention as they go by, enticing them to enter. Once inside, beacons can be used to make personalized offers, speed checkout processes and pretty much anything else the retailer can dream up.

As beacon manufacturer Kontakt has pointed out, Apple isn’t the only game in town when it comes to beacon technology. And in point of fact, Apple doesn’t actually make beacons; rather, it has developed the iBeacon standard around which beacons can be built. (Google has its own beacon standard, Eddystone.) There are a number of players in the beacon manufacturing space — not only Kontakt, but also BlueSense, Gelo, Estimote and others. Check out this list published earlier this year, and expect it to grow as more and more companies look to take advantage of opportunities in this space.

Beacons began as devices about the circumference of a large apple; today they’re mere stickers that can be placed on walls or objects. The smaller and less obtrusive they get, the easier they become to use. Beacons employ Bluetooth low-energy (BLE) wireless technology to pinpoint the location of customers in stores and other places and to deliver messages to their mobile devices. Specifically, a beacon emits a BLE signal that a retailer’s or other company’s app on a smartphone coming within range of that signal can pick up on. A big differentiator between beacons and RFID is that beacons are far more private because it gives users control of the apps that leverage the beacon. This also generally means that beacons are authenticated and with user permission, which can ultimately lead to tremendous experiences as a result.

Why: The power to revolutionize customer experiences

Writing in the Harvard Business Review, Chuck Martin called beacons “the missing piece in the whole mobile-shopping puzzle.” Pointing to the ability to push messages to people without them having to do anything at all, he sees beacons as overcoming a “major hurdle” for companies that want to engage with customers in a more personalized way — because it makes that engagement completely effortless for the customer.

Is beacon technology in your company’s future? Increasingly, the odds are that the answer will be yes.